Increase Productivity or Reduce Working time — Which Comes First?
Productivity on the stand.
Does working fewer hours per week bring more productivity? Or should companies first aim to raise productivity and then reduce the weekly schedule?
Many countries have been arguing that if you decrease the amount of time spent at work, productivity will also decrease . Chile, for instance, has been debating on whether to reduce their 45 hours work week to a 40 hours work week (still in debate as of 2020).
The Chilean’s National Productivity Commission forecasts that there will be up to a 3.5% decrease in productivity  which means that fewer work hours will be harmful to firms.
In this case, the thought process is as follows:
First you have to raise productivity and then reduce working hours.
It seems reasonable, right? First, you try to make your day more efficient and then as you’ve gained that optimization you long so desire, you don’t need to work as hard as you did.
The thing is, we’re paid by the hour. More hours worked, the more income we get. We even calculate our fees when we’re freelancers on an $/hour basis, which we shouldn’t (read this article for better insights on the matter).
On top of that, if you work extra hours your hourly pay rate is higher by law. And when the firm’s culture tells you that staying late is a sign of commitment and work ethic, the message is clear: companies reward quantity. So there’s no incentive to be more productive!
But what if we could change that by presenting another perspective?
What if productivity can be increased by reducing long working hours? You’ve got less time, and you have to make it count. Let’s see some examples of how a reduction in work hours has led to more productivity.
If we look at the historical trend on how much we’ve worked weekly through the last century and a half, we see a clear drop from a freaking 60+ hours to around 40 hours a week. That’s a 20+ hour week reduction in 130 years.
Many battles have been won to arrive where we’re now. Laws have been passed to protect workers from this asymmetric relationship with their employers.
We’ve gained more awareness of the need to have a balance between work and family/leisure. Half of the population (a.k.a women) has been added to the overall workforce. Technological advancements have improved living conditions and the industry’s efficiency.
Much has changed in this time period, and the reduction of worked hours is one of the many factors of an increase in productivity.
Now, we can ask ourselves, will this trend continue in the following years? For instance, there’s going to be more work done by AI, more automatization, and that can free us time to do other things.
We’ll just have to see how it unfolds.
Now that we’ve seen that there’s a historical trend to reduce the number of work hours, we can focus on the differences between countries.
We see a clear pattern. People in richer countries work fewer hours. For example, look at Luxembourg in the right lower corner compared to Cambodia in the upper left corner. There’s a huge difference in both variables.
There are different explanations for this effect:
- Low income: People that have low-income have to work more hours (in the same job or take more than one job) than people with high income 
- Productivity: If you take into account GDP per hour, there’s at least a 15% difference in productivity between high and low-income countries 
- Welfare: There’s an astounding 60% difference in welfare (consumption and leisure) between high and low-income countries 
And probably it’s a combination of these factors, so it might be interesting to see what happens with countries that are more alike.
We could start by comparing countries that belong to the Organisation for Economic Co-operation and Development (OECD) since most members have high-income economies.
According to the OECD, by 2019 the highest average weekly worked hours was lead by Colombia (47.71) while the lowest by the Netherlands (29.30) .
That is a 18,41 hours difference…and that’s just weekly.
How much will that amplify yearly? Let’s take a 3-week annual vacation, which is more than I can say for the U.S and many other countries. So if we multiply the average by 49 working weeks we get:
So a rough estimate would be a difference of 902 hours, which translates to 37,6 days. Therefore, an average Colombian will be almost 38 more days at work than a dutch. That’s tough.
If you take the US with a 38,59-week average you still get 1,891 hours per year, which amounts to a 455-hour difference with the Netherlands. And this amounts to approximately 19 days.
Note: this is a broad overview that hasn’t considered many other factors such as the number of public holidays, weeks of paid leave per country, days worked per week, etc.
The case of Nordic countries
This is where it gets really interesting. The Nordic countries are an example of highly developed societies. They are more equal economically and socially.
They have a big welfare state. They have a high GDP per capita and a robust HDI (Human Development Index). They are small but powerful countries. And yet, this is a “recent” event in their history.
In the ’70s, Sweden’s unions were demanding a reduction in their weekly worked hours from 45 to 40. They had been working 45 hours a week since the ’50s and at the time of their petition, their productivity was $29,7 per hour.
Compared to our Chilean case mentioned earlier, it would be near the 2018 productivity rate of $26,8 per hour .
So when the unions won, management had to adjust and do something about it. Their reasoning was:
if people were going to work less they had to train them to be more productive.
They had to have a more qualified workforce to be able to compete in international markets. So what did they do?
The educational programs changed in these countries . They added paid internships.
They became frequent and lasted longer, so students had a better understanding of “real world” problems and ways to solve them. A more practical approach. And once they left the educational system, their adjustment to the job wouldn’t take long.
Scandinavian companies became very active in these training programs. They take part in defining the educational curriculum. They encourage paid internship programs at their businesses.
Nowadays, more than 80% of firms offer continuous training to their workers . Norway has an astounding 99% rate! And that reflects on what they produce and export: highly specialized goods. We’re talking about high-tech products such as electric equipment, pharmaceuticals, specialized machinery, and motorized vehicles.
Their case shows how the increase in productivity came AFTER the social and work reforms. It wasn’t the other way around. When presented with this new reality (fewer working hours), they had to adapt and their productivity rose out of necessity.
We’ve seen a new possibility on the horizon: by reducing the number of hours spent at work you can increase productivity. With the above analysis we’ve arrived at the following conclusions:
- There’s a historical trend in reducing the number of hours worked per week. A decrease from 60+ hours in the late 1800’s to around 40 hours in current times.
- Richer countries tend to work fewer hours per week than in poorer countries.
- Between these rich countries, there’s still a large weekly hour gap. This amounts to lots of additional days of work in countries with a high average week hour work.
- The Scandinavian countries, among the most productive nations in the world, raised their productivity AFTER their social and economic reforms.
It’s not just one factor, obviously, and many social and economic changes have to occur too. But we can START somewhere.
Suggestions to increase productivity
- You could increase the amount of continuous training offered to ALL your workers. Remember Norwegian companies have a 99% rate.
- Start changing the firm’s culture by focusing more on the achievement of goals than on worked hours. You don’t want your employees to just stare at the ceiling to fulfill their working day, right? If they’ve achieved one of their goals, you might give them some leisure or family time. Send a clear message, they’ll start seeing what you value.
- Try a reduced week schedule once a month and see what happens. Just don’t experiment when you’ve got an important deadline coming soon. You could try it afterward for instance. Track it with the metrics you usually use (or try a new one) and see if there’s a change in productivity. If it starts to be a good trend, why not turn this experiment into a new normal?
There’s so much we can do, just keep an open mind. If you don’t see real changes then just call off the experiment. At least you tried and that sends an important message that you’re willing to challenge the status quo.
And you might even get to raise productivity after all, who knows?